Indiana Wholesale Wine & Liquor Co., Inc. v. State ex rel. Indiana Alcoholic Beverage Com'n, 49A02-9406-CV-384
| Decision Date | 27 February 1996 |
| Docket Number | No. 49A02-9406-CV-384,49A02-9406-CV-384 |
| Citation | 662 N.E.2d 950 |
| Parties | INDIANA WHOLESALE WINE & LIQUOR COMPANY, INC., Appellant, v. STATE of Indiana, ex rel., INDIANA ALCOHOLIC BEVERAGE COMMISSION, and National Wine & Spirits Corporation and Olinger Distributing Company, Inc., Appellees. Consolidated |
| Court | Indiana Appellate Court |
Appeal from the Marion Superior Court, Civil Division 5, James S. Kirsch, Judge, and David L. Rimstidt, Judge; 1 Cause No. 49D05-9108-CP-0871.
Lee B. McTurnan, Wayne C. Turner, Jacqueline B. Ponder, Matthew W. Foster, McTurnan & Turner Indianapolis, for Indiana Wholesale Wine & Liquor Company, Inc.
Pamela Carter, Attorney General, Richard E. Shevitz, Deputy Attorney General, for Indiana Alcoholic Beverage Commission.
Evan E. Steger, Roland A. Fuller, III, Ice Miller Donadio & Ryan, Indianapolis, for National Wine & Spirits Corporation and Olinger Distributing Company, Inc.
William W. Hurst, Michael T. McNelis, Mitchell Hurst Jacobs & Dick, Indianapolis, for Olinger Distributing Company, Inc.
The State of Indiana, on the relation of the Indiana Alcoholic Beverage Commission (IABC), commenced this declaratory judgment action on August 7, 1991 naming as defendants Indiana Wholesale Wine and Liquor Company, Inc. (Indiana Wholesale), National Wine and Spirits Corporation (National), and Olinger Distributing Company, Inc. (Olinger). 2 The IABC sought "judicial guidance on the meaning and application of I.C. 7.1-3-21-5, with respect to the Indiana Wholesale Wine & Liquor Company, Inc." Record at 27.
The statute in question (hereinafter "resident ownership requirement") prohibits the issuance of "an alcoholic beverage wholesaler's ... permit of any type to a corporation unless sixty percent (60%) of the outstanding common stock is owned by persons who have been continuous and bona fide residents of this state for five (5) years" (emphasis supplied). I.C. 7.1-3-21-5 (Burns Code Ed.Repl.1991). Acknowledging in the complaint that 60 percent of Indiana Wholesale's common stock is owned by Indiana residents, the IABC nonetheless sought judicial resolution as to whether the statutory scheme of Title 7.1 (Alcoholic Beverages) imposed additional organizational requirements with respect to residency.
On August 9, 1991, Indiana Wholesale filed a motion to dismiss National and Olinger as defendants, contending that they had no legally cognizable interest in the outcome. In response, the IABC stated its "desire ... to have all the parties before the Court to argue and represent whatever economic interest they have which may be affected" by the trial court's interpretation of the resident ownership requirement. Record at 87. Subsequently, the IABC filed an Amended Complaint for Declaratory Judgment, which sought guidance as to the meaning and application of the resident ownership requirement not only with respect to Indiana Wholesale, but also with respect to "corporations similarly organized and/or situated". Record at 130. The trial court denied Indiana Wholesale's motion to dismiss National and Olinger.
On December 3, 1992, Indiana Wholesale filed a motion for summary judgment on the construction and constitutionality of the resident ownership requirement. In a supporting brief, Indiana Wholesale argued that the resident ownership requirement was not ambiguous as to the meaning of the phrase "common stock" and that an interpretation requiring 60 percent of the controlling stock be owned by Indiana residents would violate the Commerce and Equal Protection Clauses of the United States Constitution and the Equal Privileges Clause of the Indiana Constitution. In response, National and Olinger maintained that the phrase "common stock" as used in the resident ownership requirement meant "controlling stock," and that such a construction was constitutional. The trial court entered summary judgment on March 4, 1994, concluding that the resident ownership requirement was ambiguous and that both the interpretation urged by Indiana Wholesale and the interpretation urged by National and Olinger were reasonable. Because neither the legislative history nor the wording of the statute favored one interpretation over the other, the trial court determined that resolution of the issue should be left to the IABC, which is charged with effecting the state's liquor policy. The trial court declined to decide the effect of the Commerce Clause upon the statute's construction, noting that its resolution of the statutory construction issue "does not turn upon the constitutional issue". Record at 765.
All the parties to the action appealed, 3 presenting the following issues for our review:
(1) Whether National and Olinger were proper defendants in the declaratory judgment action (2) Whether the trial court erred by declining to construe the meaning of the resident ownership requirement or address the constitutional concerns raised by Indiana Wholesale;
(3) Whether the legislature intended the interpretation urged by Indiana Wholesale to apply to the phrase "common stock," or whether the more restrictive "unilateral control" requirement urged by National and Olinger was intended; and
(4) Whether either proffered interpretation of the resident ownership requirement is unconstitutional under the Commerce Clause of the United States Constitution or the Equal Privileges Clause of the Indiana Constitution.
We conclude that National and Olinger were proper parties to be named as defendants in the action for declaratory judgment brought by the IABC pursuant to I.C. 7.1-2-8-3. We also conclude that, under either interpretation of I.C. 7.1-3-21-5, the statute facially discriminates against interstate commerce, and because there has been no showing that the ends purportedly served by the resident ownership requirement could not be achieved through less discriminatory measures, it violates the Commerce Clause of the United States Constitution. Further, notwithstanding the fact that the resident ownership requirement addresses the sale of alcoholic beverages in Indiana, it is not saved from constitutional infirmity by the Twenty-first Amendment. Thus, we do not reach the Equal Privileges claim nor the myriad arguments relating to statutory construction raised by the parties in this vigorously contested case. 4
The issue of the statute's organizational requirements first arose in a prior case in which permittees National and Olinger unsuccessfully challenged the IABC's decision to grant Marion County wholesale wine and liquor permits to Indiana Wholesale. In Wine & Spirits Wholesalers of Indiana v. Indiana Alcoholic Beverage Comm'n (1990) Ind.App., 556 N.E.2d 17, trans. denied (First Case), National and Olinger asserted that the term "common stock" in the resident ownership requirement should be interpreted to require that 60 percent of a corporate permittee's controlling stock be held by Indiana residents. They contended that Indiana Wholesale's corporate structure violated their proffered interpretation of the resident ownership requirement, because "real control" was possessed by out-of-state residents. Record at 26. The Marion County Superior Court determined that Indiana Wholesale complied with the requirements of the resident ownership requirement, and found that neither National nor Olinger had standing to bring the action.
Upon appeal, a panel of this court affirmed the trial court's decision that National and Olinger lacked standing and thus did not reach the merits of the statutory construction argument. 5 Wine & Spirits Wholesalers, supra, 556 N.E.2d at 19. In a footnote to the decision, however, the court noted that the construction of the resident ownership requirement urged by National and Olinger was "credible", and that the corporate structure of Indiana Wholesale would not meet a 60 percent "control" requirement if such a requirement were imposed by the statute. 556 N.E.2d at 19, n. 2.
After the ruling in the First Case, Indiana Wholesale applied for additional permits which would enable it to operate in other locations throughout the state. Believing that the controversy surrounding the term "common stock" needed to be resolved in light of Indiana Wholesale's pending applications, the IABC commenced the present action for declaratory judgment.
Upon appeal, Indiana Wholesale maintains that the trial court erred by refusing to dismiss National and Olinger as defendants. Because National and Olinger lacked standing in the First Case to seek a declaratory judgment, Indiana Wholesale reasons, they also lack standing in this case to be parties to the action. In response, National and Olinger argue that the standing restrictions imposed under the Uniform Declaratory Judgment Act (UDJA) 6 do not apply to an action brought by the IABC pursuant to I.C. 7.1-2-8-3, and, in any event, the UDJA standing requirements do not apply to defendants. We conclude that National and Olinger are proper defendants in this action, and that Indiana Wholesale's reasoning fails to recognize the unique nature of the remedy afforded the IABC under I.C. 7.1-2-8-3.
As a threshold matter, we note that the concept of standing differs from the concept of subject matter jurisdiction. State Dep't of Public Welfare v. Bair (1984) Ind.App., 463 N.E.2d 1388, 1391. A party has standing if he or she is the proper person to invoke the court's jurisdiction. National Rural Util. Coop. Fin. Corp. v. Public Serv. Comm'n of Indiana (1988) Ind.App., 528 N.E.2d 95, 98, aff'd Ind., 552 N.E.2d 23. The UDJA grants courts the "power to declare rights, status, and other legal relations whether or not further relief is or could be claimed." I.C. 34-4-10-1 (Burns Code Ed.Repl.1986). The following persons may invoke the court's jurisdiction under the UDJA:
"Any person interested under a deed, will, written contract or other writings constituting a contract, or whose rights,...
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